Rajoy’s government begins deleverage: 27 state companies to close down now

MADRID | A plan for the restructuring and rationalisation of public sector firms become official on Friday in Spain. The government describes it as the first step of many to achieve a public network of companies without duplicities. Some of the enterprises were founded with the aim of developing activities not yet covered by private initiative and that were of national interest, but their justification is nowadays unclear, official sources said.

In the short term, the programme, which has been designed by the ministry of Finance and the cabinet’s economic team, will affect 49 companies or over 35pc of the 140 existing network. Of them, 27 will be closed down with a further group of 14 companies in the same situation to be suppressed later on. The government will also approve divestments of state minority stakes in 35 companies.

State, regional governments and municipalities have generated 2,381 public companies, 613 foundations and 1,029 trusts. Government sources insist that this “is only the beginning” and that there is room “for much downsizing.” Some of the firms whose state stake could go on sale are Red Eléctrica (20pc), aeronautics company EADS  (just over 5%) or food company Ebro Puleva (over 8%).

Similarly, the Government will give the ‘go ahead’ to mergers of public companies and the transfer of ownership of certain equity investments in the public sector. This will occur, for instance, in the case of Correos.

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